Uncertainty is the watchword for 2023, and antitrust law is no exception. Antitrust regulators are still wrestling with big ideas this year, but the discourse has continued to sharpen. In the US, the two sides are engaging in a fundamental debate about government power, corporate power, and the role of markets in society—and they share little common ground.
Other factors will make competition law more complicated in the new year. Geopolitical challenges seem to be growing as inflation, market volatility, trade realignment, and political risk bloom. Political and economic complexity is deepening worldwide, and the tech industry specifically faces big shifts.
Here are several antitrust trends I’m watching for 2023.
Merger Scrutiny Increasing
Yes, increased merger scrutiny is an ongoing global trend—but watch for more in 2023. Recently, the UK and the EU extended the reach of their competition enforcement, and companies can expect enforcers to bring more cases. It may become difficult to predict which mergers will attract attention in which jurisdictions, and the costs of navigating merger clearance will increasingly impact which deals get done in 2023. But because the vast majority of deals close, even following intense scrutiny, more review will still translate to a deterrent, rather than a deal killer, in the new year.
In the US, antitrust enforcers have changed how they deal with merging parties, ending well-established programs like early termination, and changing their approach to negotiating remedial measures in merger cases. Proposed revisions to the merger guidelines—likely public by early 2023—are expected to reflect far more skepticism of consent decrees, vertical mergers, and the efficiencies alleged to flow from a given deal.
US enforcers look to espouse a more flexible approach to market definition and proof of market impacts. But they will likely struggle to convince courts to revise how they approach market definition, efficiencies, and “litigating the fix.”
As these changes shake out, old roadmaps won’t guide merging parties to approval. New patterns and norms will take time to emerge. Litigators won’t get bored.
Fracturing US Enforcement
It’s a crazy time for US enforcers at all levels. The fate of the Federal Trade Commission is in the US Supreme Court’s hands this term. Depending on how the court rules, there could be no FTC by this time next year. It seems unlikely that the Court would go that far, but the fact that a 100-year-old agency’s existence is on the docket is a strange omen.
Along with the FTC, the Justice Department has been seeking to broaden antitrust enforcement—both civil and criminal—but it is losing a lot of its initiatives in court. A hostile Congress could zero out the budget of either agency if it disagrees with the enforcement actions, or Congress could arm either agency with new legislation to improve its chances in court.
Any of those scenarios feels distinctly possible. And as the framework for antitrust enforcement at the federal level faces grave uncertainty, the role of state attorneys general and state competition laws grows more central. Especially if federal antitrust policy starts to suffer lurching shifts with each Congress or administration, state AGs could become a growing source of legitimacy, litigation muscle, and policy leadership in antitrust. And if the competition laws each state enforces diverge based on competing political trends in the US, businesses will face more difficult compliance and risk management.
Expect political division and a rise in state antitrust suits to lead to more circuit splits (especially if state AGs gain the power to conclusively choose the venue of their suits). And expect those splits to drive both a winnowing of cases into silos of more attractive law for one side or the other, and also for circuit splits to invite Supreme Court intervention in substantive antitrust on a bigger scale. It is also likely that the court will continue to take cases on statutory interpretation, balance of power, and class actions, with big implications for antitrust enforcement and litigation.
Tech Turning Point?
The sudden shift in the monetary environment—high inflation and rising interest rates—changes the game for investment and innovation. In recent years, hot money sloshing around the globe chasing returns meant easy funding for new technology ideas. The coming year promises investors will require more of startups, and heightened scrutiny of tech mergers narrows another avenue for getting capital into the hands of new market entrants.
Extra scrutiny of tech deals, and regulators’ growing determination to consider the conglomerate and the innovation impacts of those deals, will pose obstacles for proposed tech mergers in 2023. Deals involving a dominant online platform are likely to continue to come under the microscope.
The EU’s sweeping Digital Markets Act entered into force on Nov. 1, and begins to apply in May 2023. Some companies should be designated as “gatekeepers” by September 2023, and they will be subject to the DMA’s specified list of required and forbidden conduct in 2024. Under the DMA, all tech mergers involving a gatekeeper must be notified to the EU competition commission; under Art. 22 of the EU Merger Regulation, mergers of any size might then face EU review via a referral from any EU member state.
In short, technology companies face a big shift in how they operate and how their investors cash out. Will we start to see that shape what is offered online in 2023? It’s too early to say how the online giants will fare, but the DMA (and some big US lawsuits) pose a challenge to their business models.
In the US, antitrust law risks being embroiled in the larger political division. One side of the antitrust debate is most concerned about the threat posed by government power, and the other is animated by the threat posed by corporate power. They disagree about the problems antitrust should be addressing, and about the appropriate tools for antitrust enforcement. In 2023, this rift is likely to deepen.
Abroad—in both established enforcers and relatively new competition regimes—antitrust enforcement is ascendant and often faces less political friction. The center of gravity in enforcement feels like it has shifted.
Access additional analyses from our Bloomberg Law 2023 series here, covering trends in Litigation, Transactional, ESG & Employment, Technology, and the Future of the Legal Industry.
Bloomberg Law subscribers can find related content on our Antitrust Practice Center resource.
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